DAVID GREGORY: And good Sunday morning. Happy New Year. It is a bitterly cold morning as an arctic blast of freezing air is roaring through much of the U.S. Temperatures are going to plunge well below zero from the Midwest where they're playing some football today, to the East Coast with historical lows predicted. And this morning President Obama left Hawaii after his two-week vacation to come back to a much colder DC than Hawaii at least to try to jump start his agenda for 2014. So the stage is set for some of the key battles of this year. And these are our big issues this Sunday. Back to work. As President Obama returns, he's begun a fight with Republicans over the economy, restoring jobless benefits, raising the minimum wage. That's what we're going to be talking about. The future of Obamacare is another huge issue, the impact of the law on the quality and the costs of health care around the country and the social issues affecting everyday life. So where does marijuana use become legal? It is a growing public policy issue around the country and we'll get into that debate this morning. Joining me on our roundtable this morning, NBC News political director, chief White House correspondent Chuck Todd; the co-anchor and managing editor of the PBS NewsHour, Judy Woodruff; Republican strategist Steve Schmidt and Maryland Democratic Congresswoman Donna Edwards is here as well. Welcome to all of you. Happy New Year to all.

GREGORY: …a year of action the president said 2014 would be, so how does he take his presidency back?

MR. TODD: Well, it’s going to have to start with making sure health care works. I mean, at the end-- you know, it’s interesting-- I was talking with some administration officials over the weekend and I said so what's your January going to look like, and they ticked off a whole bunch of issues. Confirmation to Janet Yellen, fight for unemployment, insurance. We’re going to have those NSA reforms…

MR. TODD: …so they're going to take all these issues. They sort of left out health care completely, and I said, so what does health care look like? Well, they said, as long as everything continues to get a little bit better, a little bit better, they think they can somehow ease things. And I-- and ultimately, no matter what, they would like to be talking about anything other than health care.

GREGORY: Right, like…

MR. TODD: They prefer NSA reforms, which are unpopular for instance.

GREGORY: But-- but the economy has got to be a great place to start. They would like these fights because they want some credit for a good year, right?

REP. EDWARDS: Well, they do. I mean, the-- the economy has gotten so much better over the course of the presidency, and the administration hasn't really been able to capitalize on that. We're under seven percent unemployment right now. We need to extend unemployment benefits. That's why the president is engaged on minimum wage-- increasing the minimum wage to 10 dollars and 10 cents an hour; extending unemployment benefits; making sure that we make investments in transportation, infrastructure and the kinds of things that will continue to grow the eco-- economy. And frankly, Chuck, I do think that health care is getting better. You can call it what you want, but every single day it gets better for millions of Americans, and that's only a good news story for the administration.

GREGORY: Steve Schmidt, how does he take it back?

MR. SCHMIDT: Well, look, I think that he has reached the moment that other presidents have reached, which he has lost control of his ability to shape his own destiny from a domestic policy agenda. And so, Congresswoman, as we look at this health care debacle as it's unfolded over the last couple of months, we're going to find out now in the New Year whether it was a website problem or it’s a structural problem with the program. I believe it's a structural problem with the program, and this is an issue that touches every American, and so I think that this will be the dominant political issue, health care, heading into 2014 elections. And I think president and his team may not want to talk about it, but they have no choice but to deal with it, and it's going to supersede all these other debates because it's so much more personal to people.

MS. WOODRUFF: You know, Chuck is right, David. And what-- what you're saying is right. They have to get health care right. They've got to work on it. But at the same time, the argument for doing something about the economy, the argument for addressing inequality is such a compelling argument. I think back to the piece in The New York Times this week. Steven Rattner, the former top Wall Street executive, former auto rescue czar had this piece about what to remember about 2013. It was-- it was the year in charts. Look at what happened with Wall Street this year. Up 30 percent. What happened to average American wages this year? Up…

GREGORY: Right.

MS. WOODRUFF: …one percent. Productivity, way up over the last decade. But American wages barely up, so the contrast is…

GREGORY: Well, and this may be an issue that Washington could actually do something about it. On health care they seemed to have stepped back. They got to wait for the results. It’ll still be a fight but maybe the economy can be moved by that. So we'll be back with all of you. We'll talk about that and some of the other big issues like the-- the marijuana fight that’s going on around the country. I'll be back with the roundtable a little bit later. But first I want to move on to another topic here, and that is the economy, the debate over the direction of the economy. On Friday, the outgoing Fed Chairman Ben Bernanke talked about the stronger year for America's finances. But how to continue the growth is being hotly contested in Washington. President Obama pushing hard for Congress as we've been talking about to restore those emergency long-term unemployment benefits that have been cut off to 1.3 million Americans. Here's what he said during his weekly address Saturday.

PRESIDENT BARACK OBAMA: We make this promise to one another because it makes a difference to a mother who needs help feeding her kids while she is looking for work. It makes a difference to a father who needs help paying the rent while learning skills to get a new and better job. And denying families that security is just plain cruel. We're a better country than that. We don't abandon our fellow Americans when times get tough.

(End videotape)

GREGORY: I'm joined now by President Obama's economic point man Gene Sperling. He is the Director of the National Economic Council and Assistant to the President for economic policy. And also here is the host of CNBC's Mad Money, Jim Cramer. He's got a new book out called Get Rich Carefully. Gentlemen, welcome back to MEET THE PRESS.

GREGORY: So Gene Sperling, the president's goal is to get those unemployment benefits restored for those folks who are out of work. Republicans are saying, okay, if you can do it fiscally, responsibly. So what are the prospects of passage of this?

MR. GENE SPERLING (Director, National Economic Council): Well, what I would say is that tomorrow-- tomorrow is the day that 1.3 million Americans go to their mailbox and find that the check that they've been relying on to put food on their table, put gas in their cars, to look for a new job, will not be there. And tomorrow is also the day where the United States senate will have a chance to vote on the first bipartisan solution, which is a three-month extension supported by…

GREGORY: Right. So what are the chances of passage of Congress?

MR. SPERLING: You know, I would hope it’d be quite good. Because I would hope that people went home and realize some things, which is that these are people who are desperately looking for work. The economy is improving. You know, we've had a lot of momentum in the economy…

GREGORY: And-- and we’re going to get to that. But what-- how do you get it done…

GREGORY: …when Republicans say, look, what’s the offset? How do you do it in a fiscally responsible way?

MR. SPERLING: Well, you know, David, look, let's just be clear. Fourteen of the last 17 times that emergency unemployment has been extended, there’ve have been no strings attached. All five times that President Bush extended unemployment benefits, there were no pay-fors. So look, why don't we do this. Let's pass the Heller-Reed proposal tomorrow. That will extend unemployment insurance for three months. It will help these 1.3 million people and their families and then we can have time to then work for what is the best way to extend it for the rest of the year.

GREGORY: Well…

MR. SPERLING: Because if you don't extend it for the rest of the year…

GREGORY: Yeah.

MR. SPERLING: …it’s going to affect really 14 million Americans, 4.9 million and the nine million family members.

GREGORY: Is this bad for the economy, Jim Cramer, to extend this?

MR. CRAMER: No.

GREGORY: Don’t you want to help these people out there to keep spending money?

MR. CRAMER: Have to do it. I mean, not even an issue. But my problem is, how does it create highly trained workers? How does it create jobs that are highly skilled that pay a lot? These are all these band-aids. You’ve got to put the band-aids on, but it doesn't address the front much.

GREGORY: All right. But-- so Rand Paul is a Republican from Kentucky, and he said no, you’ve got to stop putting the band-aids on. Here’s what he said recently talking about the economic impact on this policy on those who are out of work.

SEN. RAND PAUL (R-KY): When you allow people to be on unemployment insurance for 99 weeks, you're causing them to become part of this perpetual unemployed group in our-- in our economy, and it really-- while it seems good, it actually does a disservice to the people you're trying to help.

(End videotape)

GREGORY: Is that how you view it?

MR. CRAMER: No. I mean, look, that's that kind of-- we're way past that. I'm surprised that even has come up again. These people need to be able to have food on the table. But the question is, how do we get these people to where the jobs are? Why are we not more focused on not just upward mobility but mobility to where the booms are in this country, and there are booms.

GREGORY: All right. Let's get to some of the other issues. Look at the unemployment chart. This is a positive stat for the administration as you see unemployment coming down in November 2013 at 7.7 percent. It looks like it will come down further. What gets it to keep coming down? What does it take for companies to go out there and get past their uncertainty and start hiring in 2014?

MR. SPERLING: Well, I think that's the right question. We have economic momentum, as Jim has said. What are we going to do with that momentum? I think there's three things. One, we have to provide more economic certainty. The era of threatening defaults has to be over, the era of shutdowns has to be over. Secondly, it's time for the Republicans to work with the president on the bipartisan opportunities we have for job creation in housing finance reform, in immigration, on manufacturing. The president has put forward a grand bargain on jobs. He has said he would be willing to do corporate tax reform that lowers rates to 28 percent, simplifies taxes for small businesses, but do it together with a major infrastructure investment. Those are things we can work on together. And then finally, you know, we do want to make sure that this recovery leaves no one behind, that we deal with economic inequality, so we have to admit, and we do admit, that the worst legacy of this great recession is the crisis of long-term unemployment.

GREGORY: Right.

MR. SPERLING: And as Jim says, we have to hit it on all fronts. Do job creation and work with CEOs, but we’ve got to give them support.

GREGORY: All right. The president also wants to raise the minimum wage. Is that a fight he should win, Jim?

MR. CRAMER: Yes. I mean, look, again, it's a bit of a distraction. Now remember, Wal-Mart can pay the minimum wage no matter how-- how high it goes. The smaller business guy, it actually is a factor. You don't want to be able to think, I can't start a business. But I don't want to get too caught in the weeds here. Minimum wage, these jobless benefits, they do not do anything versus getting people in the states that are desperate for workers. What's being done to get people to Louisiana, to Texas, to Ohio, to North Dakota, to Pennsylvania, to soon New Mexico, to Montana, these are states that need workers. But no one is helping them get there. Highly paid jobs, 90 thousand dollars for a trucker this year starting. No high school.

GREGORY: Right. Well, so here-- that gets to something in your book that I want to put on the screen that I thought was interesting. You write in the book, this book is about getting rich carefully. Washington is writing a serial novel about bankrupting us slowly. So Washington is a factor in whether the economy takes off the way people think it might?

MR. CRAMER: Well, the CEOs, much maligned in this country, I believe, are trying to figure out how to save the most. Now Gene wrote book not that long ago called Pro-Growth Progressive where he believed in globalization. I'm sure he still does. The problem with that is the CEOs are saying, you know what, other than Boeing with the Seattle agreement the other day, let's just do it in Ireland. Let's just do it in Asia. You know what, let's do it in China. They can pollute all they want. There's no duty. They can import here, the jobs can go over there, because you know what, they have got a very capitalist government. And we have a government that stands in the way. And by the way, I'm saying government, Gene, I'm not saying Democrat, okay?

MR. SPERLING: Yeah. But-- but here's the good news, Jim and David which is that if you look at the Boston Consulting Group, there are now estimates saying that the United States is more competitive for locating jobs and manufacturing than we’ve been in decades. They're predicting over 50 percent of companies are thinking about re-shoring a job here. A.T. Kearney just estimated that the United States for the first time since 2001 is the number one place for location. And we can increase that momentum by supporting the type of job creation the president has suggested. Tell me that if we were to pass bipartisan immigration reform that would bring in more skilled workers, more stem workers into our economy, if we were to launch a major effort to create jobs and modernize infrastructure, of course that would increase the attractiveness of job location in our country. The one thing I will say is yes, you know, minimum wage is just one piece of the puzzle. But I tell you, for over 10 million Americans, it's a big piece. We're a country that believes that if you work full-time, you should not have to raise your children in poverty. But minimum wage workers with two children, some of them do. We can address that. And by the way, right now the minimum wage is at the same real level it was in 1950. You can't tell me as a country that over 64 years, we can't have a higher minimum wage that allows more people to work with dignity.

MR. CRAMER: David, don't you find it interesting that the dogma is now post-Clinton, pro-immigration at a time when we have a much larger supply of labor than we need, and pro free trade. Even though we are supposed to be green house gas oriented, we know where those jobs go. Those jobs leave this country to countries that can pollute all they want. I’ve always wanted to know, why the Democrats didn’t say, you know what, we need the defense against the countries that take our jobs and pollute all over. But we don't care about that. What we care about is when workers come to this country from other countries they get jobs. Why don't we care more about our people?

GREGORY: Let me move on and turn the page here with just a matter of remaining time, the stock market. How bullish are you in 2014?

MR. CRAMER: The stock market is about profits and about Washington staying out of the way.

GREGORY: Yes.

MR. CRAMER: We’ve got Washington off the table for now, we’ve got (Unintelligible) profits. That is great for the stock market. The administration never embraces the stock market because I think the administration thinks it's only for rich people. I think that's wrong. 90 million people with 401(k)s, they’re dependent upon the stock market but the president doesn’t seem to care about.

MR. SPERLING: I think success is having upgoing and ongoing strong market and I want to disagree with Chuck Todd. I am anxious to talk and we are anxious to talk about what health care means. You know, for all the criticism, how about some focus on six million Americans who now have coverage, three million young people who are on their parents' coverage because of Obamacare…

GREGORY: These are some of the benefits that no doubt the administration has been talking about.

MR. SPERLING: …and David, today is the first day-- this is the first week ever where women cannot be discriminated against on their health care just because they're women. It's the first time 129 million Americans…

GREGORY: Okay.

MR. SPERLING: …cannot be discriminated against because they have a preexisting condition.

GREGORY: These are the selling points.

MR. SPERLING: I’m talking about…

GREGORY: I’m not going to let you get (cross talk).

MR. SPERLING: I'm proud of it and-- and it's important for American people.

PRESIDENT BARACK OBAMA: The reason I visited the Cleveland Clinic is because along with the Mayo Clinic they have been able to drive down costs more than any other health care system out there while maintaining some of the highest quality.

GREGORY: That was President Obama back in 2009 and this morning I wanted to get beyond some of these political arguments over Obamacare here in Washington and that's why I've asked two top leaders in the medical field from the hospitals mentioned by the president to give us their insights on the future of Obamacare. Joining me from the Mayo Clinic in Minnesota-- from the Mayo Clinic is Doctor John Noseworthy and from the Cleveland Clinic in Ohio, Doctor Toby Cosgrove. He is the author of The Cleveland Clinic Way. Gentlemen, welcome, great to have you here and Happy New Year.

GREGORY: So Doctor Cosgrove, let me start with you. What is the impact of Obamacare in 2014?

DR. COSGROVE: Well, this has really started out to do three things. It started out to increase access. And I think when it's fully developed, we will see increased access. It started out to improve quality of care, and-- which is very variable across the country, and I think with the transparency that it brings around quality, we'll see quality going up across the country. The real question is cost. And we really don't have the answer to that yet. We're going to have to see how this plays out overtime.

DR. NOSEWORTHY: I see it the same way. I think what-- what it basically has done has expanded insurance coverage, and what we need to do now is modernize the health care delivery system to drive quality at lower cost. And also to deal with the sustainability of Medicare in the long term, that’s-- that’s something that no one wanted to touch yet…

DR. COSGROVE: Right.

DR. NOSEWORTHY: …but the nation has to have the courage to step to that.

GREGORY: And this is a huge issue because you see doctors dealing with the fact that Medicare rates and reimbursement rates are going down. It affects hospitals. Medicare drives health care costs in this country, right?

DR. COSGROVE: In a large sense. About 50 percent of the costs are Medicare costs.

GREGORY: And what kind of reform has got to happen beyond the health care reform that has to do with insurance, which is the Affordable Care Act?

DR. NOSEWORTHY: What needs to happen now is we need to modernize the payment system to drive better outcomes to pay for results, not just activity. And we also need to take advantage of technology. Right now we can provide great information knowledge, patient care across state borders using Tele-Health, mobile and digital technology, and that's tied up right now in state laws for-- for-- for how health care is delivered and how it's paid for. And we have to fund the NIH.

GREGORY: Well, and we'll get back to that in a second because that gets to research and what makes our health system great. Do you understand all the parts of Obamacare, and will you be out promoting it?

DR. COSGROVE: Well, we-- we don't understand it at all yet and we don't understand the implications of how it is all going to affect the hospitals and physicians, etc., in this and who is going to get what sort of insurance and who is going to be covered, you know, with what sort of policy. So we really don't understand this. We do know, however, that we're going to be paid less for what we do and…

GREGORY: Hospitals will be paid less.

DR. COSGROVE: Hospitals-- everybody is going to get paid less. So there is going to be less money in the-- in the organization. And we've got to learn to be more efficient. And the health care system in the United States is not really a system. It's a whole bunch of cottage industries, and we're coming together as a system, and the-- to drive more and more efficiency across our organization.

GREGORY: So here's a question about costs. One of the big issues is not just you get enough people insured so that they can get insurance in an affordable way, but what do consumers of health care now do? The number of people going to hospitals is-- is far down. A lot of people now have insurance. We saw this week they're still going to the ER to get health care, which is very expensive. Or maybe they're not spending their health dollars in the way they should for their overall wellness, which could still cost-- drive costs in the future.

DR. NOSEWORTHY: There's no question that having insurance is a good step forward for everyone. But folks don't necessarily know what they've got when they go on the exchange and buy something until they get ill. Preventative services may be covered but these narrow networks that will likely develop and can you keep your doctor. All of that will play out over the coming months. I think it's going to be very important that we stay very close to this, but David, the Affordable Care Act will take its own path. What really-- what we really need to do is the next series of steps. The country needs to do the things-- government must do and there are things that health care providers…

GREGORY: Such-- such as?

DR. NOSEWORTHY: Well, first of all, they have to modernize the payment system, modernize Medicare, they have to find a way to enable us to bring technology across state borders. We have to fund the NIH, and ultimately the nation has to have the courage to step up to the looming insolvency of Medicare. That’s what’s pushing everything.

GREGORY: Does it mean that Medicare-- Medicare’s got to become a different program? Does it have to covers less, do you have to give fewer benefits?

DR. COSGROVE: Well, I think one of the thing-- one of the things Medicare has got to do is got to incent people to take care of themselves.

GREGORY: Mm-Hm.

DR. COSGROVE: We are not going to be able to control the cost in United States unless we deal with the epidemic of obesity, which is now 10 percent of the health care cost in the United States and gradually going up, including diabetes, etc. So we need to have incentives for individuals to take care of themselves, and that's not really as big a part of the new laws there should be.

GREGORY: Are Republicans reaching out to either one or both of you to really get a handle on an alternative that they might propose?

DR. COSGROVE: We have not been involved with the political discussion. We entered into the discussion at the time the bill was put together and gave our opinions, but subsequently, we haven't heard a lot about this.

GREGORY: Mm.

DR. NOSEWORTHY: We’ve been actively involved with Senate finance, House Ways and Means, Energy and Commerce. We have congressmen coming to us from both parties trying to understand more. And Mayo has always, for 150 years, we’ve wanted to share what it is and we know what we do. And-- these are complex issues. Modernizing Medicare and making it affordable for the country is going to take bipartisan input. It’s going to take a lot of time. It’s highly complex. But we need to do the-- it’s the right thing for the nation.

DR. COSGROVE: And-- and this is not the end of it. We have to keep changing the law, modifying the law, amending the law; because it’s not going to be a perfect law when we start out. And we have to reform the entire health care system, not just the ACA.

GREGORY: I know you want to stay away from politics. One of the big political questions right now in a lot of states is whether to legalize marijuana. We’ve seen Colorado do it. I’m asking two doctors, how do you feel about that?

DR. NOSEWORTHY: Well, that-- marijuana has been around in medical care and in recreational use for 5,000 years. It was on the American Formulary for 100 years. And it wasn’t until 1970, it was declared a Class I drug, which means it has no value and has risk. Between 1970 and 1995, a lot of things happened at the state level and we’ve seen what’s happened in California. Right now we’re in a situation where the cannabinoid system is a pain modifying system. There is an important bit of research that could happen there; but the federal government, of course, has not-- has not supported that. So there’s a lot of unknowns about this, and we have the states and the federal government at loggerheads. We’ll have to see where that goes.

GREGORY: Do you worry about it as a health matter? Say nothing of being a legal issue, but do you worry about it as a health matter?

DR. COSGROVE: Yeah. We worry about it as a legal issue. But we also worry about it as a health issue. And I don’t think it’s been very clearly defined where its benefit is at this point; and I think it would be nice to have an opportunity to really understand where it’s beneficial and where it isn’t.

GREGORY: Thank you both for helping us get beyond the debates about Obamacare. I’d love to have you back and as this thing un-- unravels over the course of the year-- not unravels in a bad way-- but continues to roll out over the course of this year…

DR. COSGROVE: Mm-Hm.

GREGORY: …year, so we understand it. Thank you both very much.

DR. COSGROVE: Thank you, David.

GREGORY: And coming up here, we’re back with our roundtable on some of the big battles and questions of the New Year. And yes, the legalization of marijuana being one of them, whether the fight is headed next to more states. And how a column by a frequent guest here, New York Times columnist David Brooks is lighting up that debate. And why liberals are so pleased about the historic change of political power in New York City? Plus, a developing story we’re following this morning, the battle for the future of Iraq as Al Qaeda seizes control of a key city. All of that coming up, our roundtable is up next.

(Announcements)

GREGORY: Coming up next, we’re back with the roundtable. Also, the latest on the developing situation with Al Qaeda in Iraq from NBC’s Richard Engel; and will marijuana soon be legal in your state? Roundtable is back to break that down. It’s next after this short break.

(Announcements)

GREGORY: Before we get back to the roundtable, I want to bring you the latest on a growing crisis: the rise of Al Qaeda in Iraq. It’s been the worst violence since U.S. forces left the country more than two years ago; Al Qaeda Sunni militants seized the city of Fallujah. It’s a key city in western Iraq, about forty miles west of Baghdad, nearly a hundred U.S. troops were killed in the key battle for Fallujah in 2004. A third of U.S. forces who were killed in Iraq were in that province, in Anbar Province. NBC News chief foreign correspondent is Richard Engel. He’s in Sochi, Russia, preparing to cover the games for us. He covered the war in Iraq extensively. And Richard of course, you have also covered the-- the Civil War in Syria. And I bring that up, because here you have Sunni militants operating in Iraq again, as they are in neighboring Syria. What’s the significance of this?

MR. RICHARD ENGEL (Chief Foreign Correspondent, NBC News): Well, we’re seeing the return of Al Qaeda in Iraq, and it is absolutely connected to Syria. The same Al Qaeda militants that are fighting-- sometimes against the regime of Bashar al-Assad, sometimes against other rebels-- are also fighting against the government in Baghdad. And it’s all about that key Sunni/Shiite divide that you just mentioned. The government in Baghdad is Shiite, and the people in Ramadi are Sunnis. And the people in Ramadi feel that they have been excluded. The people of Fallujah, same situation. They feel that they have been not been given a fair share of the political power in-- in Iraq. And you see the same divide in the conflict just across the border in-- in Syria, where you have the rebels, who are Sunni; who are fighting against the government, which is Shiite. It is one conflict across the two borders.

GREGORY: Richard, the United States has pulled out of Iraq, preparing to do the same at year’s end in Afghanistan. Secretary Kerry saying today, this is Iraq’s fight. But does the United States have a real concern, a real interest here?

MR. ENGEL: Well, the gains that were achieved by U.S. troops in Iraq, very hard-fought gains, have now been wiped out or are being wiped out. U.S. troops fought in Fallujah, they invaded Fallujah twice to drive out Al Qaeda extremists. Now it’s up to the Shiite government of Maliki to do the same thing. The United States really struggled to-- to drive the extremists out of the city. I’m not sure that this government in Baghdad has the capability; or, does it have the capability to do it without creating massive bloodshed? The-- the government in Baghdad is now threatening an assault against Fallujah and against parts of Ramadi, because there have been uprisings by Al Qaeda in both of these cities in-- in western Iraq; and the government in Baghdad says it’s going to assault them to drive these extremists out. If the U.S. had trouble doing it, and the U.S. had to destroy large parts of both Fallujah and Ramadi in order to do it, what’s going to happen when the Iraqi forces try and push these extremists out of these two cities?

GREGORY: Critics already questioning whether some of our battles there and-- and the loss of life on the U.S. side-- whether that was in vain. Richard Engel, thank you so much. You’ll be watching for terror concerns and security concerns at the games in Sochi. And we will keep pace with you, Richard. Thank you so much. And we’re back now with the roundtable. Congresswoman Edwards, I want to start with you. How much concern do you have about what’s happening in Iraq?

REP. EDWARDS: Well, I have a lot of concern; but I don’t think that the United States really has a-- a place there. I mean, it’s really unfortunate what’s happened, because so many Americans lost their lives in Fallujah. And to see this happening is really-- it’s disturbing, it’s disappointing. But it’s not the United States’ fight.

GREGORY: But this is so interesting, Steve Schmidt, you were there for the political wars in the White House, behind the-- the actual war in Iraq. Not only the question of all those gains, as Richard says, being lost; but the broader question of-- does the U.S. have any responsibility for what happens in Iraq, particularly if it’s part of a growing problem in the region?

MR. SCHMIDT: When the United States left Iraq, Iraq had the capacity-- it had the chance for a decent self-government, for Iraqi leaders to bind the wounds of the country. What you see playing out, as Richard Engel pointed out, is a Sunni/Shia civil war across the region that the United States must stay out of. We have no ability to go and affect an outcome in any of these countries in the middle of this civil war, which has been going on for some 700 years.

GREGORY: It’s fascinating, look at The New York Times today. That’s one of the lead stories. And the other is, New York State is set to loosen marijuana laws. I’m looking at you, Chuck Todd. Only because you-- you cover politics so closely. That’s the only reason. This is in a-- this is a very interesting story about what is a growing public policy debate that the states are having. Where is this headed?

MR. TODD: Well, and-- and like many of our social, cultural reforms that end up being more liberalized, culturally, it’s coming from the west, right? It’s coming from these referendums, so it’s Colorado and Washington state being the two most prominent. But of course, medical marijuana, the idea. And-- and we see these movements, they start west and they make their way east. It’s sort of-- almost a rite a passage for this. But I think this is-- this is moving pretty quickly. I think you have a-- an interesting left/right coalition here.

GREGORY: Yeah.

MR. TODD: The Rand Paul, Ron Paul libertarian wing of the Republican Party has no issue with what you do in your home…

MR. TODD: …whether it comes, in-- in some cases, with the issue of-- of a-- of a woman’s body; and in other cases, with things like marijuana.

GREGORY: Look, I mean-- I look at this, I think about it as a parent with young kids. And whether, you know-- I think it’s acceptable for them to be smoking marijuana, as well as other things that are legal that can be very damaging to them. There is a-- there is a legal aspect of this as well, a deterrent aspect. Talking to an FBI friend of mine who was saying, you know-- there still is a deterrent by making marijuana legal. But here’s something The Denver Post writes in its editorial, where they talk about pot being-- marijuana being legalized in the state. They never opposed-- opposed Amendment 64-- this is their editorial back in the fall-- mainly because of the conflict with federal law-- which exists, obviously, in Colorado-- but we’ve long supported the concept of legalizing marijuana nationwide and putting an end to the massive squandering of resources on prosecuting and punishing people for possessing and using marijuana. It appears many others now agree.

MS. WOODRUFF: So I think, David-- I mean, that reflects-- I think there’s clearly a growing support around the country for decriminalizing…

GREGORY: Yeah.

MS. WOODRUFF: …marijuana. Legalization is something else. And yes, it’s happened in two states; and yes, New York is moving toward medical marijuana. And people are-- are now saying they like the idea. They’re willing to think about the idea that marijuana is legal. But when you get down to practical effects, it’s only been in-- in effect in Colorado, legal for a few days. Already, it’s wreaking a little havoc. I talked to a good friend there over the weekend, who lives there. And she was telling me, she said, you know, the police are having to learn how to detect when drivers have been using marijuana. It’s different. She talked about-- you know-- the ski resorts in the state, which are a huge draw, are going to have to figure out what do they do about this. Because they’re on federal lands, there are all sorts of safety issues. Marijuana can be dangerous. Yes, it can be fun, as David Brooks wrote about in his column this week, but there are-- but there are other issues. And I think, you know, we’ve only looked at…

GREGORY: Right.

MS. WOODRUFF: …one part of it.

GREGORY: So here you mentioned David Brooks. There was so much reaction to his column in The New York Times in-- in social media circles, various platforms. So here’s part of what he wrote in his column on Friday. In legalizing weed, citizens of Colorado are, indeed, enhancing individual freedom. But they are also nurturing a moral ecology in which it is a bit harder to be the sort of person most of us want to be. He talked about his own experiments and ultimately regretting them.

REP. EDWARDS: Well, it’s true. I mean maybe that’s sort of the rite of passage that, you know, Chuck kind of refers to. Look, I think first as a parent. But I also look at a public policy where we have driven so many young black and brown men and women into the criminal justice system. The entrée was marijuana. We can figure out these issues, I think, from a decriminalization standpoint of how you detect marijuana use. Are you-- I mean, the same rules still apply if you’re driving impaired and those sort of things. But we do have to get to a point, I think, in this country where we say, you know what? There are some things that need to be regulated, because it actually makes it safer. And marijuana, I think probably falls under that.

GREGORY: You’re a westerner, Steve. Where do you see this? Now you’re a westerner.

MR. SCHMIDT: Well, look-- look, I-- marijuana has been functionally legal in the state of California for many years.

GREGORY: Yeah.

MR. SCHMIDT: Anyone who wants to smoke marijuana can get a prescription to-- to…

GREGORY: Not hard to get that little green pass. Yeah.

MR. SCHMIDT: The-- the-- you know, the-- the reality here is, when you evaluate it over the long term. How much money have we spent in this country trying to enforce the war on marijuana? How many people do we have locked up, non-violent marijuana offenders, in this country? And what percentage of them are black versus middle class white kids? So this era of prohibition is coming to an end. This product should be-- should be legal. It should be regulated, it should be taxed. And we talk about as parents things that we’re concerned about.

GREGORY: Yeah.

MR. SCHMIDT: As a parent of young kids, I worry about my kids turning on the TV and seeing Miley Cyrus. The-- it is a dangerous world out there. Yeah. And there’s a lot of…

(Cross talking)

GREGORY: Right. But there is a little bet of-- there is a little bit of sentimentality like, well, you know, if I tired pot, it’s not going to be so terrible. I mean, there is medical issues with that. I don’t know all the science behind it, but then it’s a lot more potent now. I mean, this-- I don’t know, it doesn’t seem like as a parent it’s something that should be just sort of…

MR. SCHMIDT: …there’s alcohol. And a parent has a responsibility, not the benevolent hand of the state, in all issues and all matters forever in perpetuity.

GREGORY: Yeah.

MR. SCHMIDT: Parents have to have a relationship with their kids where they say, hey, don’t do this. But at the end of the day, has this been a successful government policy, this prohibition policy? I-- I think it’s very difficult to make an argument…

GREGORY: …away from this and talk about some of these-- the-- the bigger issues that we’re seeing in the country, especially the role of progressives now; and with de Blasio now the mayor of New York City getting a lot of attention New Year’s Day. I saw the headline in-- in The New York Times, de Blasio draws all liberal eyes to New York City, lab for populist ideas, a tax-the-rich mayor gives national left a rallying point. What’s going on in Democratic politics?

MR. TODD: Well, I think-- well, the day and age of ideological diversity inside both parties has been disappearing, I think. And-- and now we’re seeing a move here where the Democratic Party is more united in what it stands for these days. It has moved to the left a little bit…

GREGORY: Yeah.

MR. TODD: …in a way-- the same way the Republican Party, which used to have ideo-- ideological diversity inside the party, liberal Republicans, conservative Republicans, Libertarians-- we’re seeing them coalesce, sort of, around one sub-ideology inside the Republican umbrella. So I think that’s what’s going on inside the Democratic Party. The question is-- as we sort of sort ourselves in this way, where we have much more stark choices-- like I remember in 2000, Gore and Bush were trying to sound like the same candidate, and you had-- I think that’s why we ended up in a tie.

MR. TODD: Right? Is because the country didn’t know. It is-- we have not had this clear of a divide between the two parties ideologically, perhaps in a couple of generations. What does that mean? I think it means the gridlock we get in Washington, because it is so hard to find compromise when you’re that far apart.

GREGORY: And here-- here’s-- here’s de Blasio at his inauguration speaking about some of the inequality he wants to address in the city.

(Videotape)

BILL DE BLASIO (D-New York City Mayor, Wednesday): We are called to put an end to economic and social inequalities that threaten to unravel the city we love. And so today, we commit to a new progressive direction in New York.

(End videotape)

GREGORY: I mean, Judy, it’s interesting to me that part of the reaction to Obama on the left is to say, he’s let us down on some of these real progressive areas.

MS. WOODRUFF: And that explains why, I think-- you know, picking up on what Chuck was saying that-- you know, there is this kind of excitement in some Democratic circles about de Blasio, because there’s this full-throated support for some of these policies, which interestingly pre-kin, you know, universal pre-kindergarten, you know, has some support in both parties. But I-- I think there’s a big difference between saying the country is ready, or a lot of people are ready for a surge toward liberalism; and saying that what we’ve got in New York is-- is a situation where somebody was in power for a long time-- Michael Bloomberg-- one philosophy. And, you know, we know historically in this country, when somebody is in power in a long time and party shifts, policy shifts. And I think that’s-- that’s mainly what’s happening in New York right now.

GREGORY: So more broadly, as we think about Washington getting back to work, the big stories, big political stories in 2014-- I’ve got a list of them here and I’m going to put them on the screen-- Obamacare, immigration, the debt ceiling, the broader economy, control of the senate. Steve Schmidt, how do Republicans tackle these? Where is there any progress?

MR. SCHMIDT: Well, I think it’s going to be a (Unintelligible) a year for progress. And I think you can make a strong argument you won’t see progress until we’re into a new presidency and the-- and the logjam breaks. Certainly, as Jim Cramer was talking about, that divide between small things, the minimum wage issue; and big things, how do we create economic growth, how do we create upward mobility, how do we unleash the engine of prosperity with big reforms? I don’t think any of those things are going to happen. One issue not on that list is energy. And I think it’s one of the most under-covered stories of 2013, the energy boom in this country. And when Jim Cramer is talking about the places where you can go get a job out of high school driving a truck for 90,000 dollars a year, that is because of the energy revolution in this country, which has profound security, ramifications for us globally, and that’s going to be an issue that’s out there this year as we talk about fracking and other things.

GREGORY: Donna, I guess a minute left here. Donna, you have to look at some of the progressive goals, whether it’s raising the minimum wage, maybe it’s restoring jobless benefits, maybe that’s easier. But you have to take a tough look at Congress and say, I don’t see how I get this through the House. Don’t you think that as a Democrat?

REP. EDWARDS: I think-- I think it’s complicated, but I think it’s still important to define what those issues are, sort of where the dividing lines are. And when I look at a Bill de Blasio, what I see there is the ability in a jurisdiction to create that kind of-- kind of change that really is about closing that economic gap-- whether it’s on minimum wage, expanding child care, closing the inequality gap-- and using that as a platform for promoting some of these things in a Congress that is going to be quite recalcitrant in terms of accomplishing.

GREGORY: All right. Let me get another break in here. We’re going to come back and talk about the terror attacks in Russia, safety concerns for our athletes in next month’s winter games. I’ll speak with former Homeland Security Secretary Janet Napolitano. And also, does she think that Edward Snowden should get a deal? A lot of intelligence background that she’s got is part of our exclusive interview, coming up.

(Announcements)

GREGORY: Here now some of this week’s Images To Remember.

(Graphics on Screen)

Digging Out: New NYC Mayor Bill de Blasio.

Lighting Up: Dubai New Year’s Fireworks Display.

Antarctica Rescue: Passengers Leaving Icebound Ship.

NHL Winter Classic: 105 Thousand At Annual Outdoor Game.

Putin In Skis: Testing Sochi’s Olympic Slopes.

GREGORY: He’s not a big delegator. That last image of Russian President Vladimir Putin testing an Olympic ski run on Friday ahead of next month’s games, because apparently there was no one else to do that job.

Coming up next here, the more serious issue of Olympics and politics and security. The message President Obama is sending to President Putin, coming up.

(Announcements)

GREGORY: Now to the politics of the Olympics. An issue we’ll be discussing a lot here on MEET THE PRESS, with just over one month to go before the opening ceremonies of the Winter Olympics in Sochi, Russia. Two suicide bombings in Volgograd, just six hundred miles from the site of the games, are raising some questions about potential for more terrorist attacks and the safety of U.S. athletes. I spoke with Janet Napolitano, the former Secretary of Homeland Security, who is leading the U.S. presidential delegation to the opening ceremonies.

Madam Secretary, now President Napolitano, welcome back to the program.

GREGORY: Good to have you here. Let me start with the very difficult matter of security at the Olympic Games. Given your background, what are the major questions you would have when it comes to protecting U.S. athletes going to the games?

MS. NAPOLITANO: Well I think-- you know, security has always been an issue with the games, probably going back at least to Munich. And so, you know, the questions are the logical ones. Have appropriate preparations been made? Do we have good liaison between the United States and the International Olympic Committee and with the host nation, and the like? And then just making sure that everyone who is attending the games, you know, knows to be alert, attentive to their surroundings, that sort of thing.

GREGORY: There is not great cooperation between the United States and Russia now on a host of issues; and even the government has said that we’d like a closer look at some of the security preparations, be in closer dialogue. Should that be an area of concern?

MS. NAPOLITANO: Well, you know, I haven’t been privy to that. I know the State Department through their security division and the FBI will have security people on the ground. And so I think we’re going to have to rely on that. We look to cooperating with the IOC, with the host nation, and the other countries that are there in terms of protecting the security of the games.

GREGORY: Again, if you were head of Homeland Security, as you were, would you look at this recent history of attacks, look at some vulnerabilities; and conclude that this is just a probe by terrorists to potentially target the games?

MS. NAPOLITANO: I don’t know that I would conclude that. I think that what you would do is just be alert to the fact-- you know, to the situation. But remember, in-- in the run-up to all the games recently, there have been security issues, security questions, have appropriate preparations been made. After the games, everybody talks about the actual performances, which actually is-- is the point.

GREGORY: The USA Today concluded on Monday in its paper the following-- and I’ll read it to you, about broader concerns. Yet as the new security measures were being advanced, the Volgograd attacks in Russia underscored a long-standing concern in the run-up to the Winter Games. Two months ago, a western security official with knowledge of the Russian Olympic security plan told USA Today that there was fear that so many resources had been dispatched to lock down Sochi, that other potential targets throughout the country including transportation hubs, could be vulnerable. Again, an area of concern for you?

MS. NAPOLITANO: Well, I-- I think if-- if true, absolutely. And I think that what the speaker was saying is if all the security arrangements are in Sochi, does that expose other so-called soft targets to potential terrorist attacks? But look, the United States will work as closely as we can with Russia, with the IOC, with the other countries there. We want the games, obviously, to be safe. And we want it to be about the athletes, because we’ve got a terrific team going.

GREGORY: It’s also, though, in part about making a statement to Russia, particularly with some of the laws they’ve passed against gay and lesbian athletes. You are leading the presidential delegation to the opening ceremonies. And you look at some of the others, including famous gay and lesbian athletes in America, Billie Jean King, Brian Boitano and Caitlin Cahow as well. The message is unmistakable: you don’t have the president or vice president going. What would you like President Putin to hear through all this?

MS. NAPOLITANO: Well, I think what we would like to do is demonstrate that the United States is a very free and open and tolerant society. I’m going to represent my country to support our team. And, you know, and partially represent the University of California, which is the largest public research university in the world.

GREGORY: And politicizing the games in this way, is this-- is-- does this take away from the attention on the athletes that you said is so important? By making-- even if it’s a subtle statement, everybody gets it?

MS. NAPOLITANO: Well, there have always been politics, at least in my-- my memory, there have always been some politics surrounding the games, particularly in the weeks in the immediate lead-up. Once the athletes start going down the runs and doing the skating and the first women’s team ever to be ski jumping, the attention will turn. But in the meantime, yes, everybody will be conscious of security and making sure that athletes and spectators are safe.

GREGORY: The other issue, of course, with Russia has to do with Edward Snowden. And I ask you again to put back on that intelligence hat as former head of Homeland Security. And I ask you, how much damage has been done to U.S. intelligence by him, do you think?

MS. NAPOLITANO: Oh, I think Snowden has exacted quite a bit of damage. And did it in a way that violated the law. I think he’s committed crimes, and I think that, you know, the damage we’ll see now and we’ll see for years to come.

GREGORY: But if we’re concerned about other documents, other material that he has, as the New York Times suggested; should clemency for him be on the table if it meant securing some of this other information?

MS. NAPOLITANO: Well, I think that would require more intimate knowledge of what he allegedly has. But from where I sit today, I would not put clemency on the table at all.

MS. NAPOLITANO: I-- you know, I would rule it out. He has, by individual fiat, leaked very extensive information. You know, the president has been very clear-- was very clear with me when I was secretary-- that there needed to be discussion and open dialogue about, you know, the balance between privacy and our privacy values, and security. And remember, these are both important values. There is a balance, a right balance, to be struck here. Mister Snowden just decided to go off on his own, and he did exact quite a bit of damage in my-- in my judgment.

GREGORY: So you’re no longer Homeland Security secretary, so I could ask you all those political questions that I wanted to ask you for so long from when you were a politician. So here’s a couple. We’re talking about the statement about gay rights in America and same-sex marriage, and some of the difficulties that athletes experience in Russia. When you were governor, you opposed same-sex marriage. Have you changed your views on that?

MS. NAPOLITANO: Yes. I-- I think-- like many in political and elective life in the early part of this century, that the evolution hadn’t occurred and my statements were very much in-- in that way; which is to say that this was something that society-- in a way, the arc of history as it were-- needed to-- to get there. And the arc of history has clearly arrived.

GREGORY: And on presidential politics, of which this would be a part-- when you were among the early supporters of Barack Obama, you felt that he was a fresh voice for the Democratic Party. Well, now, as you look ahead to 2016, you-- you chose him over Hillary Clinton. Do you think that she will be a fresh voice in 2016 in a way that she wasn’t in 2008?

MS. NAPOLITANO: Well, I think I have the utmost respect for former Secretary Clinton, with whom I worked closely as the secretary of homeland security. And I think we’re all awaiting her decision as to whether she’s actually going to be a candidate.

GREGORY: But would she be a fresh voice in 2016?

MS. NAPOLITANO: I think she will be, because she’s had a lot of newer and different experiences than perhaps she had then.

GREGORY: President Napolitano-- Secretary Napolitano, good to catch up with you. Good luck in the New Year and in your new work.

MS. NAPOLITANO: Thank you so much.

GREGORY: Back now with our roundtable. With our remaining time here, I want to talk about what’s happened here on the program today. And Chuck Todd, you were singled out by Gene Sperling on this broader question of Obamacare. It’s similar to where we began the program. He’s saying no, we do want to talk about Obamacare, we’re going to own it this year. Do you think that’s true?

MR. TODD: I-- I think the administration hopes that that’s where they get to a place.

MR. TODD: The problem they’ve got is congressional Democrats, the Senate Democrats. Gene Sperling is not running for U.S. Senate in Arkansas, in Louisiana, in North Carolina, in Montana. All of these red states where the issue of health care is so politicized and it’s such a sort of red/blue divide that it’s going to be a challenge. Now he-- he is right. If the administration can turn this page, and make it so all of a sudden Republicans are on the side of taking away health care by-- you know, by opposing the administration on health care, they could possibly, at least-- I would say, get rid of some of the hostility toward health care in places like North Carolina. It’s never going to I think become popular in those states this year.

GREGORY: Judy, the question is whether Congress has any real appetite to do what Doctors Cosgrove and Noseworthy were talking about, to go beyond just the insurance question, but some of the other aspects of the health care system that still need to be addressed. Certainly, Medicare doesn’t look like a promising area for them to negotiate.

MS. WOODRUFF: No, that was a fascinating conversation by the way you had with them a few minutes ago. No, not-- maybe in another year. This is a year divisible by two. It’s an election year.

GREGORY: Right.

MS. WOODRUFF: There are the primaries and then there’s the general for the-- for the senators and-- and for House members. Every single one of them, the idea that we’re going to tackle something big. Immigration, different subject. Maybe something happens there in a piecemeal way…

GREGORY: Right. Yeah.

MS. WOODRUFF: …maybe the administration comes together, but I don’t see it on Medicare.

GREGORY: All right. Thank you all very much. Great conversation today. Great having you along the whole way. That is all for today. We’ll be back next week. If it’s Sunday, it’s MEET THE PRESS.